Sit Geoffrey Howe,
Sir Geoffrey was Margaret Thatcher’s chancellor of the exchequer, as
A lawyer, Sir Geoffrey (b. 1926) studied at
ACHIEVING A SINGLE MARKET
Sir Geoffrey Howe: When this conference was organized about 12 months ago, nobody could have foreseen that the face of
I just sent a message of congratulations to the new president of
Liberal economics must be the key to recovery. I recall, with some encouragement, my first visit to
I knew at least that his heart was in the right place. The case for liberal economics is just as important there, on a more sophisticated scale, as in what we’re doing in what we used to call
The first thing to realize about 1992 is that it isn’t an event, it’s a process. It started long before the Lord Cockfield White Paper of 1985 and it will go on long after
In fact, 1992 evokes the objectives of Magna Carta. If you go back to 1215 and look at Magna Carta, you’ll see two key propositions: the standardization of units of measurement throughout the kingdom and provisions for the freedom of movement of merchants. These are the essential features of a large unified market in which trade and profits can prosper.
In that sense, 1992 doesn’t require dramatic new techniques or new strategies for European or American firms. It’s designed to create a framework which will reward what has worked in the past-good marketing, reliable products, high-grade production engineering, and excellent design. It’s designed to remove any residual featherbedding for the inefficient or the overpaid in all the EC countries.
A European Common Market does not, in itself, either centralize power or decisively promote expansion in the role of the EC. It’s designed to devolve power, not to
All the EC member states now agree that the logic behind 1992 is irrefutable. The skeptical, protectionist mentality, which was once widespread in virtually every country in the Community, is being shattered. Of course there’s room for legitimate hesitation about how far and how fast we go on the social front. Too often,
THE SPECTER OF FORTRESS
Second, the specter was fueled long before the 1992 goal by the existence of long-standing protective measures in four sectors: agriculture, automobiles, steel and textiles. The situation in the
Third, the removal of national technical standards and their replacement by common European standards lies at the core of the 1992 program. There still may be some decisions that don’t suit American firms just as there will be some that don’t suit Italian, Dutch, British or German firms. That’s not evidence of discrimination. Very often it is essential and helps in the development of world standards. It will make trade more open and make the European market easier to penetrate from the outside. So 1992 is free trade friendly at home and abroad. Criticism from the
EAST MEETS WEST
I hope 1992 will open and extend a new era of partnerships for all of us, in liberal economic thinking and practice. So 1992 is only one signal of new optimism in
Ryal Poppa (StorageTek): Do you see the breakup of the Eastern bloc delaying 1992 or the effect of 1992?
Howe: No, but we need to watch the changes in
Robert Dilenschneider (Hill & Knowlton): What impact will 1992 have on the economies of the
Howe: The spirit of economic liberalism embodied by 1992 clearly demonstrates to
Sidney Reso (Exxon Company International): Most of us who work with all the countries in
Howe: The combined dynamic of the EC comes from the Commission, the European Parliament, and the Council of Ministers representing the nation states. On the whole, we in the
I remember meeting George Shultz at the London Summit in the 1980s. We were having a talk at the dinner table with the French, German, Italian, Canadian, and Japanese foreign ministers about how this thing works, and he said, “Gee, you’re talking about a whole different structure.” And I said, “No, we’re talking about a new, different, unique structure, where the rulings of the new
Sir Ronald Halstead (British Steel): Regarding competition policy and the division of responsibility between Brussels and the U.K., where do you see the future of the balance, when it comes to dealing with competition policy, in mergers and acquisitions, in those states of the European Common Market?
Howe: What we’ve been trying to do in
But at least it is better than having a mishmash of 12 independent, competing structures with a thirteenth imposed on top of them.
Sir James Blyth (Boots Co.):
Howe: If anything is for sure, it’s the success of the
The Community provides a setting for us to do that. Our central task is to promote a quality form of manufacturing in
Halstead: We must all remember that Geoffrey in his first budget abolished price control, wage control, and exchange control. It’s the most dramatic change ever to occur in the economy in this country and it set the pace. We must compliment Geoffrey for being so courageous. No one believed he would do it, even though he said he would. This was truly a remarkable feat of yours, Geoffrey, and certainly set this country on the course of economic recovery.
Howe: Let me just add one thing that I don’t think we’ve touched on at all, which is still the most striking example of protectionism. And that’s in the field of agriculture. It’s the worst example of the sustainment by tax finance protectionism of artificial economic activity of all. And yet we do need to maintain the health of our rural communities.
More resources are wasted by the maintenance of agriculture protectionism generating surpluses, which are dumped on world markets to the destruction of the primary producer-peasants and
THE EUROPEAN MONETARY SYSTEM
Ambassador Bernard Vernier-Palliez (Case Poclain): Do you think
Howe: I’m not going to rewrite history. But I have had no doubt about the importance of managing exchange rates for a number of years. The Bretton Woods System brought an enormous expansion of world economic prosperity. And as we try to reconstruct the framework of economic order, it will become increasingly clear that currency stability should be part of it.
As far back as the economic summits in 1982 and 1983, we found nations beginning to reach out on the re-creation of currency stability. I remember being impressed by a speech made by Arthur Burns in 1974, in which he argued that we needed to reestablish an international relationship something like the rule of law. I rather hoped that could have led to the more successful establishment of a compact among the leading nations of the world.
Looking from the point of view of a business audience, I’ve always thought that the business community looks to political economic managers for two things: stability of domestic currency and as much stability as possible in terms of international exchange rates.